All Nippon Airways Bringing New Low-Cost Airline to Asia

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The skies in Asia may become a lot more crowded in the second half of 2011. That’s when All Nippon Airways (ANA) plans to launch a new low-cost airline to compete with the likes of rapidly growing AirAsia and Qantas-owned Jetstar. In addition, another low-cost airline is in the process of being formed by Thai Airways and Tiger Airways, which is partially owned by Singapore Airlines.

While the new carrier will be a separate operation, ANA will own 39%, Chinese investment firm First Eastern will own 33%, and Japanese investors will own the balance.

ANA hopes the low-cost carrier “will stimulate demand for air services, with domestic fares that can compete with long-distance buses and trains, without cannibalizing its own business,” reports the New York Times. The yet-to-be-named airline is expected to fly domestic short-haul routes and international flights out of Osaka’s Kansai International Airport.[more]

Shinichiro Ito, ANA’s chief executive, told the Times, “Regardless of the intense competition in the air transportation industry, we anticipate an increase in passenger traffic demand in East Asia and came to the conclusion that a low-cost carrier would be the right approach to compete effectively in this market.”

One likely reason for ANA’s expansion is because Japan Airlines, its primary competitor, filed for bankruptcy last January in one of the largest corporate failures in Japanese history. With Japan Airlines currently in the throes of a state-financed reorganization, ANA, which flies close to 50 million passengers a year, could benefit.

Asia is a hot spot for air travel, but Japan has traditionally been too expensive for low-cost carriers due to the country’s fuel taxes and high landing fees. Kansai International Airport and other secondary airports are making concessions, however, so Japan may soon become a viable market for low-cost carriers.

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